(Reuters) - Equipment rental firm Ashtead (AHT.L) warned on Monday that its annual profit would come in lower than last year and said it had taken out an extra $500 million in debt, as the company faces a slump in rentals due to the coronavirus-led shutdowns.
The company, which rents out diggers, construction tools and other equipment, expects underlying pretax profit for the year through April 30 to be about 1.05 billion pounds ($1.31 billion). Last year, Ashtead had reported here a profit of 1.11 billion pounds.
“Since the middle of March, the unprecedented action taken by governments and the private sector to contain the virus has resulted in adverse conditions within the group’s end-markets,” the company said.
Ashtead’s Sunbelt business, however, posted a 2% rise in its March rental revenue in the United States as the unit provided equipment and services to first responders, hospitals, alternative care facilities and other essential services.
The equipment rental firm had said it would refocus its UK business to mirror the growth of its non-construction businesses in North America as it faces pricing issues and foreign exchange headwinds.
Total U.S. rental revenue is still expected to come in about 15% lower this month, the UK-based company said, adding that since April 10 it has seen the level of its U.S. fleet on rent stabilise and show a “modest improvement.”
Ashtead also said it has accessed an additional $500 million through its senior-secured credit facility for one year, increasing the facility size to $4.6 billion, as it looks to shore up its cash reserves to weather the pandemic.
Other cost-saving measures include cutting down its planned capital expenditure by about 500 million pounds, suspending M&A activity and halting its share buyback program.
The company’s shares were up 4.7% at 1,915.5 pence, as of 0714 GMT.
Reporting by Pushkala Aripaka in Bengaluru, Editing by Sherry Jacob-Phillips